Cromwell Ipswich City Heart Trust unitholders vote to extend Trust
On 26 September 2018, a meeting of unitholders in the Cromwell Ipswich City Heart Trust (the Trust) was held to decide on the future of the Trust. Unitholders were asked to vote to either extend the Trust’s term for a further four and a half years, or to sell the asset and wind up the Trust at its original maturity date, 28 December 2018.
In a similar outcome to the successful vote to extend the Cromwell Riverpark Trust in 2016, unitholders were supportive of the proposed extension, voting overwhelmingly in favour. Unitholders also voted in favour of the provision of a Matching Facility, to allow those unitholders who wished to exit to sell some or all of their units to unitholders wanting to purchase more.
High participation rate and overwhelming support to extend
Cromwell’s Investor Services Team worked tirelessly over the five-week voting period to ensure unitholders were aware of the vote, the potential outcomes, and also knew there was an option to sell their units via the Matching Facility.
With over 800 unitholders (and 52.5 million units) in the Trust, the vote saw a participation rate of 83.82%. Of this, 98.42% voted in favour of the Further Term Resolution (Resolution 1), with 99.22% voting in favour of the Constitutional Amendment Resolution (Resolution 2).
As a result, the successful ‘For’ vote on Resolution 1 extends the Trust Term by four and a half years, until 28 June 2023, and the successful ‘For’ vote on Resolution 2 set in motion the Matching Facility.
Unitholders hoping for more units
Like the Cromwell Riverpark Trust before it, the second of Cromwell’s ‘back to basics’ trusts is lauded for its predictable monthly income, single-asset investment, conservative leasing fundamentals and excellent capital growth. In the current low-interest rate environment, support to retain the Trust was not surprising, and many unitholders commented on the reliable monthly income as one of the irreplaceable features they didn’t want to give up.
Further, the interest from unitholders in the Matching Facility was overwhelmingly popular, with applications to purchase additional units in the Trust far exceeding those units offered for sale, resulting in all buyers having their purchase scaled back to 20.51% of units applied for.
As an existing unitholder in the Trust, the Cromwell Direct Property Fund applied to purchase further units and was also scaled back at the same rate.
Matching Facility finalised
On 1 November 2018, the Matching Facility was finalised, with the transfer of units complete and sellers receiving their proceeds for units sold. Unitholders who sold their units at the Matching Price of $1.4041 achieved an annualised return of 14.0% since inception.
Current Trust features
The Trust’s asset, the Ipswich City Heart Building, is currently valued at $123 million and the unit price now stands at approximately $1.43. As a further boost to unitholders, the Trust’s annual distribution rate is scheduled to increase to 11 cents per unit (cpu) per annum from 1 January 2019, up 1.5 cpu on the current rate of 9.5 cpu.
The Trust is now due to mature on 28 June 2023.
Cromwell Funds Management would like to thank all Cromwell Ipswich City Heart Trust unitholders for their support throughout the voting process. Access to the Trust is only available through the Cromwell Direct Property Fund, which, following the vote, holds approximately 13% of units on issue in the Cromwell Ipswich City Heart Trust.